Can the UK become a world-leader on decentralised energy post-Brexit?

Britain's imminent departure from the European Union (EU) offers an opportunity to push the nation towards the forefront of an interconnected, decentralised energy system - but only if the Government delivers constructive regulatory support mechanisms.

The expert panel agreed that a close energy relationship with the UK's European neighbours will provide certainty for investors

That was the overriding consensus of an expert panel during a discussion on the future energy relationship between the UK and the EU, held yesterday (21 March) as part of a public session of the Business, Energy and Industrial Strategy (BEIS) Committee.

Renewable Energy Association (REA) chief executive Dr Nina Skorupska said that the UK cannot afford to rollback its European-derived renewable energy commitments during the two-year Brexit transition period, which will begin immediately after Article 50 is triggered on 29 March.

“What’s been striking is that the clear and stable UK policy framework for renewables has delivered extraordinary solutions," she said. "[The UK] enjoys 25% of our electricity from renewables sources now, and that’s because the UK has put its neck out and said we are going to do it. That has been in concert and arguing with EU rules but we have been clear and we have been leaders.

“The question we have now is: what will replace that? Are there framework and support mechanisms in place that stimulate the innovation and drive for new business models; this decentralised energy world that we can hopefully enjoy? The Industrial Strategy has got a big act to follow to give that certainty and opportunity, and we as an industry want to engage with that.”

Skorupska told the Committee that REA members have stressed that solar pholtovoltaics (PV) and energy storage must be play an essential role in the Industrial Strategy.

“The good thing with deployment of solar means that costs are coming down, and we will see the now with energy storage,” she said. “We will see storage and solar take off again. But will the UK Government allow us to change our arcane electricity regulatory support mechanisms to allow us to deliver this new future?”

Energy system of tomorrow

The UK could be at the forefront of developing innovative power purchase agreements (PPA) for industry, according to Skorupska, provided the approach is aligned with developments in the European energy markets. Although early indications suggest that the UK will not be part of an internal energy market post-Brexit, Skorupska said that a close energy relationship with the UK's European neighbours will provide much-needed certainty for investors.

This view was also shared on today's panel by Institution of Engineering and Technology deputy president Nick Winser CBE, who also holds a role as chairman of the Energy Systems Catapult (ESC), a technology and innovation centre set up by Innovate UK.

In his role as ESC chief, Winser works with SMEs focused on exploiting the opportunities created by the need to transform global energy systems. He told the Committee that investment in smart technologies can drive a decentralised UK system, and also create a European market for energy products and services.

“We expect the energy system of tomorrow will be very different from today,” Winser said. “In some ways it will become more complex, involving customers much more actively with a greater mix of international, national and local elements. There is a real opportunity for us there. We are still relatively small in terms of interconnection of electricity so we are a bit of an island system. There is a great opportunity for us to innovate and to look at those products ahead of our departure.

“There is a huge opportunity for us to be in the lead on products and services for localised, decentralised markets. We need to be cautious that we don’t end up with standards for the design and delivery of such products to diverge from what is going to be agreed on quite a centralised basis because of the integrated nature of the system across Europe. It’s a key export market for us in terms of those key products and services for the digital, decentralised energy system.”

‘Open for business’

Currently, uncertainty surrounds the exact type of energy relationship the UK will forge with the EU once the Brexit process is complete. Some commentators raise concerns that the UK could end up with a similar deal to Switzerland, which has suffered from stalled integration into both the single electricity market and EU-Emissions Trading Scheme (ETS).

Later in today's discussion, Cambridge University professor Michael Pollitt told the Committee he expected the UK to be “punished” in a similar vein as the Swiss experience, but insisted that the UK should look further afield to secure energy deals with emerging markets such as China and Japan to prove the UK is “open for business”. Pollitt concurred with the other panellists that Brexit provides an opportunity for the UK to operate an efficient, low-cost, decentralised energy system.

“We are into a new phase of experimentation,” he said. “Nobody really knows where we go from here. If we are serious about our climate targets and the implications that has for increasing the renewables in our system, then we’re going to see divergence between countries and the way they run their energy systems. That does provide an opportunity for the UK.

“If we are serious about achieving our targets in a way that demonstrates how to achieve to the rest of the world at low-cost, then we should take that opportunity of how to be a demonstrator of how to do this. We could make ourselves a California or a New York within New York, where we are doing things differently and organise our markets differently if that is what is required.”